Sunday, July 01, 2007

Which Teams Get the Most For Their Money?

Today marks the beginning of the NHL free agency period and I though it would be interesting to take a look at the NHL version of marginal wins. The basic concept is easy enough to understand: what team receives the greatest return from the money they spend on player salaries? Now you might think that the simplest thing is to simply divide each team's NHL standing points by the total amount they spent on salary but unfortunately that is not appropriate because no NHL owner can spend $0 on player salary. There is a minimum amount that any NHL franchise must spend to field a team, so the best appraoch is to look at what sort of a return each team gets for the money they spend beyond the minimum.

Even a cheap owner like Bill Wirtz must field a roster of 20 players for each game and with injuries and call ups most teams end up paying for more than 20 player salaries each season (For the minimum team I assumed 23 rosters spots at the lowest available market price). In theory an owner could ice a team composed of nothing but players making the league minimum salary and offer the fans the Cheapest Team of All Time. This Cheapest Team will serve as our benchmark for comparison. (Note: under the new CBA their is a salary floor that prevents any owner from putting out something like the Cheapest Team of All Time so this cannot happen in the real world anymore.)

How would the Cheapest Team of All Time fare? What if we had a roster of nothing but young prospects, AHLers and washed up veterans playing out the string? Hmmm, that sounds a lot like some NHL expansion teams. If we take a look at expansion teams we see that the Thrashers and Sharks each collected just 39 points and the Ottawa Senators finished with 24 points. But the all time low was established by the expansion Washington Capitals who earned just 21 points in an 80 game season. Based on the Senators and Capitals examples I'm going to say that the Cheapest Team of All Time would only win about .25% of their games. Last year in the NHL the average team earned 91.4 standings points and so our Cheapest Team would have only earned approximately 23 points.

OK now that we have figured out what the minimum NHL roster would fare we can move on to the rankings. In order to rank the teams we need to calculate marginal points. The formula for marginal points is the following: (Team salary minus minimum salary) divided by (Team points minus minimum points). In plain English what I'm doing is looking how much each team spent beyond the minimum and how many points they earned above what the Cheapest Team would have earned. What this does is give us marginal points which tells us how many points that particular team gained for each additional dollar it spent beyond the absolute minimum required.

Pre-Lockout Rankings 1996-2004Now I calculated marginal points rankings for a 10 season period between 1996-2007 but first I am going to present the results for the eight year period before the lockout and then show you the post-lock out rankings. In the table below each team is ranked based upon their combined standardized marginal win efficiency for the seasons between 1996-1997 and 2003-04. I have also listed the number of playoff appearances and years in the league and the percentage of years in the league. The last column lists the GM of that team for the 2003-04 season.

Now if you look at this table that ranks the 30 NHL teams based on their marginal wins we see that some teams are much better than others in terms of getting points out of the money they spend on players salaries. The Rangers are at the bottom (hardly a shocker) while thrifty teams such as the Wild, Predators and Senators occupy the top spots.

But the other thing this table shows us is that getting the most for your money didn't necessarily matter in the old NHL. If we divide that list into thirds, the teams that are the most efficient in terms of getting the most out of their money only made the playoffs of 53% of the time. The teams in the middle third made the playoffs 47% of the time. The teams at the bottom third of the marginal points list made the playoffs 70% of the time. That is one reason the league was not healthy pre-lockout, teams that managed their money smartly were not rewarded. To put it bluntly the big spending teams were playing a different game than the poorer clubs. The Detroit Red Wings could make a Uwe Krupp sized mistake ($16 million over four years, 30 NHL games played over those four seasons) and still make the playoffs with ease. For other franchises an Uwe Krupp sized mistake would have killed their playoff chances for several seasons.

The new CBA ushered in an era when every team needs to become adept at getting the most for their money. All 30 teams are required to have a payroll between the floor and ceiling which puts a premium on getting the most out of every dollar. How would the formerly big spending teams adapt? Would the teams that were good at managing their money thrive and even dominate under the new system? Let's take a look at how each team did under the new CBA.

The following table is set up to allow for easy evaluation of how a team did pre-lockout (column 1) and post lockout with both season combined (column 3) or each post lockout season individually (columns 6 and 8). I also provide the names of the team GMs that assembled those rosters (columns 5 and 7) and list how many times the team made the playoffs the last two seasons (column 4).

Marginal Pionts Ranking 1996-2004

Team Name

Marginal Poinst Post Lockout Ranking

Post Lockout Playoffs

2005-06 GM

Marginal Points 2005-06 Ranking

2006-07 GM

Marginal POints 2006-07 Ranking

1

NAS

1

2

D.Poile

2

D.Poile

2

6

BUF

2

2

D.Regier

1

D.Regier

4

3

MIN

3

1

D.Risebrough

4

D.Risebrough

7

16

CAR

4

1

J.Rutherford

3

J.Rutherford

18

22

SJS

5

2

D.Wilson

5

D.Wilson

9

17

ANA

6

2

B.Burke

11

B.Burke

3

2

OTT

7

2

J.Muckler

7

J.Muckler

8

28

DET

8

2

K.Holland

8

K.Holland

5

25

DAL

9

2

D.Armstrong

9

D.Armstrong

6

18

FLA

10

0

M.Keenan

6

M.Keenan

17

27

WAS

11

0

G.McPhee

12

G.McPhee

11

13

PIT

12

1

C.Patrick

30

R.Shero

1

30

NYR

13

2

G.Sather

10

G.Sather

13

5

CGY

14

2

D.Sutter

13

D.Sutter

16

15

VAN

15

1

D.Nonis

23

D.Nonis

10

7

NJD

16

2

L.Lamorielllo

15

L.Lamorielllo

20

21

MON

17

1

B.Gainey

16

B.Gainey

22

23

COL

18

1

P.Lacroix

21

F.Giguere

19

12

TBL

19

2

J.Feaster

20

J.Feaster

21

10

NYI

20

1

M.Milbury

26

G.Snow

12

11

ATL

21

1

D.Waddell

24

D.Waddell

14

26

TOR

22

0

J.Ferguson

22

J.Ferguson

23

4

EDM

23

1

K.Lowe

14

K.Lowe

25

20

STL

24

0

L.Pleau

29

L.Pleau

15

14

PHO

25

0

M.Barnett

17

M.Barnett

29

19

LAK

26

0

D.Taylor

19

D.Lombardi

26

9

CBJ

27

0

D.MacLean

25

D.MacLean

24

29

PHI

28

1

B.Clarke

18

B.Clarke

30

8

BOS

29

0

M.O'Connell

27

Choarelli

28

24

CHI

30

0

D.Tallon

28

D.Tallon

27

AnalysisWhat happened when the NHL entered the salary cap world? Well we see that some of the thrifty teams continued to excel in that area (NAS, BUF, MIN, OTT) while others did not (EDM, CBJ, BOS, NJD). We also see that a number of the big spenders made the necessary adjustments to the new rules and continued to thrive (SJS, DET, DAL, ANA) but others continued their pre-lockout pattern of receiving a poor return on their salary investment (CHI, PHI, LAK, STL, TOR). Other teams have combined strong season with poor ones (CAR, PIT, VAN, NYI). Some teams appear to have taken longer to adjust to the new NHL but made big improvements in their second try at it. The most improved teams are the Penguins, Canuks, Blues, Thrashers, Islanders and Anaheim. The list of backsliding teams who did worse their second year includes the Hurricanes, Panthers, Montreal, Edmonton, Coyotes, Kings, Flyers

Perhaps the most important thing for the health of the league is that intelligent use of money is now strongly connected to getting to the playoffs. A team that signs a player to a stupid contract is much more like to pay the penalty in on-ice performance. You cannot spend your way out of mistakes as was the case in the past. In fact, it is nearly impossible to make the playoffs without smart spending (the NJ Devils being the one exception the last two years--it is a good thing for them Brodeur is vastly underpaid). The top 10 post-lockout teams made the playoffs 80% of the time (The Florida Panthers spent wisely but just didn't spend enough to get into the post season). The middle third in the post-lockout marginal ranking made the playoffs 65% of the time, while the bottom third just 15% of the time. Intelligent allocation of payroll money is an absolute requirement for team success if the new NHL. The less on of the last two season is that if a team makes sound decisions with player salaries they have a strong chance of being in the playoff hunt and getting into the post-season.